British Airways and Iberia granted approval to deepen their co-operation

11 December 2003

oneworld™ partners British Airways and Iberia Airlines have been given approval by the European Commission to deepen their co-operation, gaining the European equivalent of anti-trust immunity.

It has granted them exemption from regular competition legislation, under Article 81 (3) of the Treaty of Rome, for joint selling and network planning, coordinating capacity and pricing and profit-sharing or other economic co-operation in their passenger activities together with joint pricing, management, sales and handling of cargo, under an agreement between the two airlines reached in July last year.

The ruling, which also applies to British Airways franchisee and oneworld affiliate GB Airways, follows three months of consultation. As is normal in these cases, it applies for an initial six years.

British Airways Chief Executive Rod Eddington said: "This is a sensible step forward in our efforts to progress consolidation in Europe. The alliance will give customers access to more destinations and more convenient schedules. It will also bring significant cost benefits which will be passed on to customers in lower fares."

Iberia President Fernando Conte said: "This agreement is a major step forward in our already solid relationship with British Airways which will make us more competitive in today's difficult environment, while offering our customers a larger range of services, frequencies and destinations. The aim of this co-operation model is to achieve synergy benefits while preserving the separate identities of the two companies."

Among the conditions agreed with the European Union, the airlines have undertaken to provide sufficient slots at London Gatwick and Madrid airport to allow a competitor to operate a maximum of four daily return services between the two airports, together with slots at London Gatwick to a competitor to operate one daily return service to Bilbao and, subject to growth demand, daily return services to both Seville and Valencia.

They have also agreed to enter into an interline and frequent flyer agreement with a competitor, if requested, covering services between London and these four Spanish cities and to freeze their frequencies on these routes and on London-Barcelona for two seasons (until March 2005 in the case of Barcelona) after any transfer of slots.

British Airways and Iberia began working together in 1999, code-sharing on domestic Spanish and UK routes, following the acquisition by the UK carrier of a 9 per cent shareholding in the Spanish airline, as part of its privatisation. Today, they carry out sales representation for each other in 27 countries worldwide, code-share on 40 routes and have joint check-in, ticketing, lounges and handling at 24 airports, mainly in Europe and South America. GB Airways operates services in the colours of British Airways and to its standards, with BA flight prefices and Iberia code-shares, to 14 destinations in Spain.

fine